Ctp N V

And good morning and thanks for joining on this Q3 call. Talk about the results and the things we have been busy with over the past couple of months and maybe start with talking about CTP. A growth company, we enjoy growth, we like growth and we see growth opportunities to continue, develop, build. for our clients and secure new business. So growth comes from supply chain professionalization if you like. So we have seen obviously many events over the past decade and you could maybe conclude or say that this whole supply chain becomes more professional so companies adapt or adjust to different market circumstances or different events which we have seen over the past years and we benefit from that in different ways. It's one supply chain. Second is nearshoring. We continue to see manufacturing coming to Central Europe for the region, for Western European countries as well. But we also see growth in the markets of Central Europe, so the consumer spending. Maybe when I came here first in 1995, 30 years ago, Central Europe was about low-cost manufacturing. In the meantime, of course, with all the GDP growth which we have seen over the past decades, the local population, have money to spend and they do spend and obviously that results in demand for property warehouse for example e-commerce etc we see also growth coming from defense industry as well as talk about it but in the meantime we've also seen some some concrete demands in our german portfolio for instance there's multiple companies who are involved in the defense industry and they ask for more space that's good so we continue to see mostly from existing clients strong demand from a diverse tenant base, including retailers, pet food manufacturers, semiconductor business, but also demand from automotive related industry, maybe moving from West Europe to Central Europe, to Eastern Europe, or Asian companies coming in and set up business in Europe for the European market. In numbers, we signed 1.6 million square meters over the past 9 months and 25, which is 6% up compared to what it was in 2024 six percent plus and we have done that at six percent more rent so our rent average per square meter per month has grown with six percent again we look also forward to continue this trend and typically we close a lot during the last part the fourth quarter of the year as we've done last year in the years before so from schedule to close more leases by the end of the year Stable, consistent growth. Two-thirds of our business comes from existing clients, our partners, long-term clients, loyal clients. It's also them who helped us grow in new markets. We get 99.8% of all the rent which we charge is being paid, retention rate 85%, and 80% of all the new construction happens in existing business parks. Our integrated business model combines the operator, so talk about how we break down our different business lines, the operator is the income producing part of the business, those are all the properties which we have built over the past years is good for 718 million euro of rental income, around that number. Second activity, the developer, with 2 million square meter of properties under construction, with a land bank of 26 million square meter. Those are the people who are busy with building property, constantly improving the quality of the property, come up with different property concepts and innovations, make properties that consume less energy, less maintenance cost. You want generic design buildings because the building will last beyond the lease term of the first tenant, etc. Especially nowadays with so many changes going on, it's very important that you get the property right, the location right, and to make sure that you have amenity services available. utilities, electricity on site in those business parks and make sure that your clients can grow. And that's what happens. The last, if you break it down and say, okay, we have this operator, income producing, developer, construction, the last bit, maybe most exciting part is growth engine. We have been growing beyond the markets where we are active. Remember the IPO we did also to raise capital, to get access to capital, affordable, cheap capital to grow our business beyond that. that's what we continue to do this year we delivered 500 000 square meter a bit more half a minute square meter mostly pre-leased we do 10.3 yield on cost and who are those tenants it's lpp for bucharest hitachi for bernal japanese client long-term client but also zoom lion in tatabania in hungary is one of our chinese clients thank you very much to the clients for the continuous support commitment and loyalty and thanks for working with us. We've been able to complete these projects on time and in budget. Again, end of the year normally is a lot of projects come to the market. We have 2 million square meters under construction, 2 million. Not all of that will be complete by year end, but many will, and the rest will go to 2026. When all of the stuff which we build and complete this year comes to the market and is leased, and we are another €165 million of rental income at 10% yield on cost, we are well on the way to hit the €1 billion of annual rent by 2027. That is our target, and we are on schedule to hit that target. A couple of highlights maybe on different markets, what we see good is Czech, stable, we've been here for a long time, it's our home market, good occupancy, good returns. Poland, relatively new for us, largest economy of course in Central Europe, quite important to be there. It's done well, more than we planned, so quite happy with that. Germany, as well we see more demand over the past couple of months, also turned into deals, we signed the lease contracts, which is good. and also makes us positive for the future. Some of you had the opportunity to visit us at our Capital Markets Day in Woepertal in September. So you have also seen our products in Muenheim, Aachen and of course a couple of other places. So it looks like over the past years we have been able to put a team together, we have secured land and permits that we now can go ahead and build those properties and lease them, which we Look forward to doing. Yeah, so we actually think it's just the beginning of CTP. I think it's more complicated probably to come from zero to build 10 or 15 million square meter portfolio than it is to double from 15 to 30 million square meter. Let's see, we have systems in place, we have a fantastic team of people, great relationships with clients but also with the local authority. So actually we look forward to hit that 30 million square meter one day. We target for 2030. Let's see how far we get. So far it looks good. Maybe a couple of things about the new markets. Wanted to talk about Italy, which is another European market, northern Italy, where we have many clients coming from that part of Italy. We now have an opportunity to get started with some projects which we look forward to doing and we hope some of them will already be complete next year in 2026. So that will happen. We think it's a next logical step in the region. We obviously are already active in Germany and Austria and Yeah, in Italy, Northern Italy, we see some good opportunities to introduce our full-service business park concept. We'll start with some smaller projects maybe, but there's also an opportunity to accelerate and to come up with a different entry strategy, similar to what we've done in other countries, Germany and Poland over the past years. And then Asia, we definitely like to have a closer look at the opportunities in Asia as we think our company and our clients don't stop in Europe. They go beyond. They are often global players and they have asked us whether we would be willing to support them in Asia, in Vietnam to be exact, and we have been spending the past 12 months looking at opportunities and we became more positive and enthusiastic about the idea of doing a project in Vietnam. So we expect more to come from that. Don't expect huge things. We will start with one project and maybe do a second. We learn by doing with existing clients, with pre-leases, but definitely some opportunities, a hundred million population, early thirties, average age or young, very productive. with huge FDIs, not only from the consumer electronics industry, but also Lego and Volkswagen Skoda have just opened up a plant or building a plant. So many opportunities we see there, which we want to have a closer look at. Happy to answer any questions. I think I'll hand over to Martin for now with some more details on the financials. And then I'm here later. Thank you very much for your attention.

Moving on to the financial highlights. The like-for-like rental growth came to 4.5% in Q3 2025, while occupancy remained stable at 93%. The net rental income increased 15.4% to €549m, as we continue to reduce our service charge leakage. The NRI to GRI ratio therefore improved to 97.7%, while we also continue to improve our EBITDA margin. Annualized rental income increased to 778 million euros, illustrating the strong cash flow generation of our portfolio. The company-specific adjusted APRA earnings increased by 13.1% year-on-year to 305.2 million euros, while the Group's EPS amounted to 64 euro cents, an increase of 7.2%. Thanks to the deliveries and net development income being back-loaded to the fourth quarter, the Group is on track to reach its guidance for the year. Now looking at the valuation results. For the Q1 and Q3 results, only the investment properties in the development are revalued. Valuation results in the first nine months of the year came to 802 million euros. Of this, 385 million euros was driven by the construction and leasing progress on our developments. But 373 million euros came from the revaluation of our standing portfolio and 43 million euros from our land bank. The total cross-asset value now stands at 17.7 billion euros, up 10.6% from full-year 2024 and 16% year-on-year. CTP's reversionary yields stand at a conservative 7%. And we expect further yield compression and positive EFV growth, in line with inflation or slightly ahead of inflation for the rest of 2025. This is also illustrated by the new leases signed in the first 9 months of 2025. That ends up 6% higher than the new leases signed in the first 9 months of 2024. This is supported by the undersupplied nature of the CE markets and industrial and logistics space per capita is only half compared to the UK or other Western European markets. The transaction markets continue to recover across Europe as there is more clarity around funding costs. We expect an increase of transactions into next year. especially on the private equity side, where funds are coming to maturity. We expect to see more turnover. This will offer opportunities for us. We also remain active in the market for land acquisitions, replenishing the land bank in our existing markets, growing the land bank in countries that we entered recently, like Poland, which we plan to enter, like Italy and Vietnam, while maintaining our disciplined capital allocation. Our APRA net tangible asset per share increased from €18.08 at year end 2024 to €19.98 at the third quarter, representing an increase of 10.5% since the beginning of the year. Year on year the increase was 14%. With this NTA growth and our dividend, we delivered a total accounting return to our shareholders of 70% in the last 12 months, highlighting our superior return profile, which is unique to the real estate sector. And now I hand over to Richard.

Our funding strategy remains centered on maintaining a stable investment grade rating. And we are very happy that our improving credit metrics were recognized by Standard & Poor's with their upgrade in September. We focus on ensuring access to multiple sources of liquidity, meaning attractive funding is available at all times. We have a geographically diversified investor base, now further strengthened by Asian investors added in 2025. and a growing share of unsecured debt towards our target of 80%. Thanks to our highly accretive developments and proactive debt management, our interest coverage ratio increased to 2.5 times. Our normalized net debt to EBITDA remained stable at 9.2 times, and our loan-to-value stood at 45.2%. We expect loan-to-value to return to our 40% to 45% target as our development pipeline is completed and revaluation gains are fully booked. As presented during our Capital Markets Day, with our market-leading development yield on cost of over 10%, every euro we invest in our pipeline increases our ICR and decreases our net debt to EBITDA, allowing us to grow at our 10% to 15% while improving our overall cash flow credit metrics. This was also highlighted by Standard & Poor's on their upgrade of our credit rating to BBB flat with a stable outlook in September. Moody's have a positive outlook on our credit rating, confirming the positive trajectory of our ratings. In the first nine months of 2025, we signed €1.7 billion of unsecured debt to fund their organic growth. This included 1 billion euros in dual-charge bonds issued in March, an inaugural 30 billion yen Samurai loan, equivalent of 185 million euros, and a 500 million euro syndicated term loan facility signed in June, which had commitments of over 1.2 billion euros. Together with the six and a half year, 600 million euro bond we issued in October, this continues to demonstrate our ongoing strong market access. We continue to actively manage our funding costs. And over the past 12 months, we have renegotiated or repaid 1.6 billion euros of our most expensive bank loans. including the prepayment in June of €441 million of expensive unsecured debt. CTP maintains a conservative debt profile. The €272 million of bonds maturing in June and the €185 million maturing in October were both repaid from available cash. Looking ahead, maturities remain limited over the next three years, with a €350 million bond due in January 26 and a €275 million bond in September 26. Our cash position stands at €1.1 billion, including our €1.3 billion RCF. Our liquidity totals €2.4 billion, more than sufficient to meet our cash needs for the next 12 months. The average debt maturity stands at 4.8 years and the average cost of debt at 3.2%. This represents only a minimal increase compared to year-end 2025 as our current marginal cost of funding remains below 3.5% for five-year money. We remain confident in the outlook for CTP. We have a strong tenant lead list. In addition to what we have already pre-let within our development pipeline, we have 151,000 square meters pre-let for future projects for which construction has not yet started. We continue to see rental growth across all of our markets, supported by the nearshoring trend and ongoing e-commerce growth, particularly in the CEE region. Our tenant-led development pipeline remains highly profitable. with our industry-leading yield on cost of over 10%. We are able to deliver sustainable and profitable organic growth, while maintaining a robust financial position. We confirm our EPS guidance of 86 to 88 cents for 2025, which, due to an intended acquisition in Romania not proceeding, is now expected to come in towards the lower end of that range. Thank you for your attention. We now welcome your questions.

Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Marios Pastu from Bernstein. Your line is now open. Please go ahead.

Hi, good morning. Thank you for the presentation and for taking my questions. I just have two questions from my side. So I see leasing is up over the first nine months. It's marginally down in Q3. I think you mentioned that you want to have a good final quarter, but I also see that last year that final quarter was also very strong. So do you expect to be up in terms of leasing volumes for the year as a whole? And then secondly, can you just remind us why the intended acquisition in Romania didn't proceed as planned? Thank you.

Hey Marius, good morning. I will take the last question on the Romanian acquisition first, and then I'll let Raymond comment further on leasing. So it comes back to anti-monopoly reasons where there were too restrictive conditions for us. So we decided not to go ahead with it. We see enough opportunities in terms of acquisitions across Europe. We continue to buy land, so we always do also relative capital allocation. That doesn't make more sense for us. In the end, with the restrictions here, it didn't make sense, so we decided to prefer to invest in other opportunities.

Thank you. Our next question comes from John.

We didn't answer the second part of the question because the leasing, if you like... Apologies, continue. No, I can get some comment on that. Anyway, with reference to what Martin just said, well, even if we wanted to buy, we can't buy because it is very complicated with the anti-competition and the anti-monopoly, whatever, which actually is not bad because there is other places where you can invest money. That's what I think. We waste a lot of time on that P3 acquisition, which didn't happen. But as I said, at the end, maybe it's even better without it. With regards to the leasing, yes, as stated, we continue to see demand, and that will turn into deals over the rest of the year, which is good. So that is often the case that the fourth quarter is more take-up than first or second. I don't know exactly why that is, but it has been historically like that, and we think that trend will continue for 2025. Yeah, so we did sign some leases just now in Poland, which is good, and in Romania as well, in Germany. So, yeah, overall relatively positive, I would say, I think, and we are on schedule to hit the occupancy target for end of 2025.

Thank you very much. Thank you.

Thank you. Our next question comes from John Zong from Kempen. Your line is now open. Please go ahead.

Hi, good morning. Thank you for taking my questions. On Vietnam, you said that we shouldn't expect huge things with only one or two developments. So just trying to understand here, over what timeline do you expect to start these developments? And if you're really excited about the opportunities in the country, why only start with one or two and not with like a spark strategy like you're in Europe?

Yeah, good question. Well, it's definitely going to be a park concept. So we think of using or doing the identical thing or similar thing to what we do in Europe. So park concept, business park, full-service business park with different property types. um but uh so that is definitely the case but you need to also get ready in terms of setting up a team and um so we are now in the middle of recruiting um people for our vietnam office or vietnam team and that will take a bit of time so that's why i think honestly the recruitment process has started we have met people people came over to visit us in in in Europe in order to make themselves familiar with what we do, how we do it, to get to know other people in the organization. It's also part of the recruitment process and it takes time until these people will actually join, which some of them will join in Q1, beginning of next year, Q1 of 26. And simultaneously we have agreed an option on four land sites and that would give us the opportunity to develop around 300,000 square meters It will be very nice, and I think some of that we can start next year in 26, but those buildings will come to the market in 2027. And so that is what I think now. So that means 300,000 square meters, 150 million euros. I think construction costs will be a bit lower in Vietnam, as you can see at the moment. It's not going to be 500. It's more going to be like, what, 400 euros per square meter. And we think of course doing that at 10% plus yield on cost, so above 10% yield on cost. But that is the base plan and maybe we see opportunities to accelerate and to grow more through some acquisitions as we have done before when we entered a new market that we do our organic growth, buy land and develop or maybe here and there buy something which would help us get a bit more volume. But, yeah, so that is how we see it now. So we will need time to get familiar with the market, to put up a team, to get started. And we want to do that carefully. But once we get going, so from 27 onwards, maybe there's an opportunity to do 200,000, 300,000 square meters per year, maybe. The market is big enough, 100 million people, there is hardly any stock left. There are, of course, a couple of players, GLP or SLP. They have been and they are phasers, maple tree. It's not... So there is, of course, a significant amount of developers. But if you look at the stock compared to the amount of inhabitants, 100 million people, and if you look at all the opportunity, then the market is very... It's at the beginning. And as I explained, the amount coming from our clients, we think... It's a good opportunity to proceed with. But that's so I can, I will continue, of course, update you on how far, how quick we can get. But that's for now how I see it, or how we see it.

Okay, clear, thank you. And just on the 10% yield on cost, is that net of land leases, given that you cannot own land in Vietnam?

Correct, it's a 50-year leasehold or a concession. So what we, if we calculate as very primitive, very simple, so we add the concession cost for 50 years, then on top we add cost for everything related out of pocket to develop the property, so infrastructure, construction cost and all of that. So yes, that is included. And we think yield on cost in Vietnam is more towards what we do in Serbia. So well above the 10% yielding cost. Okay, great. So, yeah, all right.

Good. So, John, so in Serbia, in Vietnam, like everyone says, you're looking at kind of like Serbian type of relationship where you're developing at, you know, trying to get to 12 and revaluing at 8.5%.

Thank you. Our next question comes from Siraj Goyal from Green Street. Your line is now open. Please go ahead.

Good morning. Thanks for taking my question. Just a quick one. It's on leases again. Saw that new lease assigned at rent level 6% higher than last year, but just saw it seems that it's lower in Serbia, Hungary, Romania and Bulgaria. I appreciate there may be some nuances here, but Would you be able to share some color as to why this may be the case? Thank you.

Hey, Seral. That's always what we say. Some years will be up, some years will be down. It depends a lot on which leases you are signing, especially for the smaller markets. It depends a lot on which projects are coming online and when they are exactly coming online and which quarter you are signing the leases. To be honest, you always see volatility. Last year, for example, we did less leases in Czech. This year, Czech, in terms of absolute amount of leases, is doing very well. Same with what we had in Hungary. Hungary, we did last year a bit more leases, this year a bit less. That's the normal business cycle. You can lease the space only once. You try to lease at the highest rental levels possible to what we think are our clients which add value for us long term in our park model. So it really depends on what is the opportunity building set you have for leasing. So there is no, if you look across the markets, there is no structural trends in either one of them that is really, for us, a point of concern. Some markets are better than others. That's year on year. Overall, what you see is we do more leases. We do them at higher rents, and that comes really back to the demand drivers, which are long-term, and they won't change from one day or another. The demand drivers that were in place last year are still in place. And it comes back to the nearshoring. It comes back to the growth in domestic consumption, et cetera. But it depends a lot on which quarter you sign which specific deal. That's always been the case. Also, if you look back historically. So, overall, that's what Raymond also said. We are confident in our market. occupancy targets to hit by year end and the leasing is progressing well towards that also that's why we confirmed basically the guidance for our deliveries between 1.3 and 1.6 million square meter for the year so we are very well on track and with the amounts of hold that we are doing and the conversations that the team on the ground has We have confidence in getting there. And some markets will contribute a bit more than others, but that's normal.

Thank you, Martin.

Thank you. Our next question comes from Stephen Booman from ABN Emerald Auto. Your line is now open. Please go ahead.

Good morning, and thank you for taking my questions. I have two. So the first one, a follow-up on the expected leasing numbers. Do you think that the average rent per square meter will rise above the 6 euro per square meter per month for Q4, and what about 26? Maybe that's the first one, and then I'll do another.

It would be good if they are above 6. In some markets, they will be. I don't know, maybe Martin has the average number. Where do we see rental growth? We see a lot of rental growth in the German-Deutsch industry portfolio. Remember the old buildings we bought, or older buildings we bought? Of course. Why is that? Because we bought a little bit cheaper, and when we bought, the rents were quite low, 3.5 euros, or let's say 42 euros per... Per year, and we see that going up to, yeah, 70, 60, 70, that's true. We have to also invest in those properties, but just yesterday we did a deal at that kind of number, yeah, so it's around 60 euro per square meter for the Dutch industry. I think we see rental growth throughout, yeah, also Romania, because the other question was that we do less in Romania. I don't think so. We have seen a lot of rental growth in Czech, so, yeah, Czech I would think is 6 euro per Yeah, maybe, Mark, you can add someone there, whether it's 72 euros or 70 euros per year on average. Maybe throughout the portfolio. I mean, big box logistics in Bucharest, you will not get to six for sure. But something smaller in Czech, you will definitely get to six. Poland, you will not get. Although, by the way, the small stuff we do in Warsaw, so we have SBU, Small Business Units, Obviously, that is higher than six, but those are small units of 1,000, 2,000 square meter units. So lower than 5,000 square meter units, the square meter price will be significantly higher than a large 10,000, 20,000, 30,000 square meter warehouse building. So I think there is also... the difference in rent per square meter per month. But that is going quite well, these smaller units, which also, yeah, we like, because there is good demand for it. As part of what's going on in the region of Central Europe, of course, you have small and medium-sized companies. That segment is growing. But there's also... big multinationals taking smaller units here and there. Yeah, so then they pay more rents. Martin, do you have some more details on the average?

Yeah, you can see that also in the presentation. If you look on, Stephen, if you look on slide 10, you see exactly the rents. that we are making per country. Whether we in the Q4 will be above 6, like Raymond said, depends a lot on which market we are signing. If we are signing more in Czech, yes, we will be above 6. If we sign more in other markets, it will be a bit harder. But that's normal. So what we are looking at is what is the real underlying rental growth country by country. And that's ultimately, that comes back to the 6% that we are showing. And smaller counties, as I said before, it depends sometimes a bit on location, because whether you're leasing the capital city, whether you're leasing the smaller units or bigger units, So in Poland, we have, for example, seen the increase. So the leases which we did this year were on average at €5.50. But that includes some smaller stuff, includes in some cases some extras that we do for tenants. But on average, Poland, we see some rental growth coming through. Romania as well, if you look at the underlying, Well, if you look maybe to the absolute figures, they look flat, but that's because there is a big unit again in this year's numbers, so big units typically pull it slightly down. But if you look, and I know it's harder for you than for us because we look at it on a unit-by-unit basis when we are doing the deal, when the leasing team sits down to speak to the tenant, we look, okay, what is the EFV of the unit? We continue to track towards that. And then when we look on that detailed level, we continue to see the rents creeping up in countries like Romania, in countries like Poland, in countries like Serbia, etc.

Okay, to ask a bit differently and to fully understand, so like-for-like growth per country is, let's say, inflation-like, maybe a bit more, but let's say inflation, and then the mix, you don't want to commit that that will change materially as of today. So the mix should be broadly similar. It could be a bit better or a bit worse. Is that correct?

That's correct. Look, what we see is, what we said is we expect market rental growth indeed to grow in line with inflation. The mix depends indeed where we sign the leases. That's hard for us to commit. If you look on a year or two year basis, yes, we can give a rough split, but not on a quarter by quarter. That doesn't make sense. That's not also how we run our operations. So that's harder to determine, but the underlying rental growth remains there, and that's also the confidence we have, and that's also reflected in the like-for-like rental growth coming through in the P&L. So it's not only the market rent, it's also, if you look to the like-for-like, when we are really capturing the reversion of leases coming up for expiry.

Yes, Stephen, I think that the big picture is we see increasing demand and we see that increasing demand at higher rent levels pretty much across the markets in which we operate. If you look at the more granular data, you will find something that looks a little bit worse, but the overall trend is the one that we would try and highlight, which is continuing strong growing demand and that at higher rent levels.

Okay. That is very clear. Thank you.

Thank you. Our next question comes from Rizan Maket from DeGroove BetaCam. Your line is now open. Please go ahead.

Yes, good morning. Thanks for taking my question. I hope you can hear me. I have two. Maybe on the first one, it's a follow-up on Vietnam. Just wanted to understand a bit what will be your target in terms of tenants. I will assume that you will mostly look for existing tenants that you already have in CEE for the first project. And secondly, what level of project will you feel comfortable before launching such a project?

Thank you. Yeah, we hear you loud and clear. Good questions. Indeed, so what we want to do in Vietnam is very similar to what we do in Europe, full-service business parks. whereby we offer a variety of different property types. In Vietnam, they use the word ready-built factory, and they use ready-built warehouse, and they refer to build-to-lease. We call it a little different. We say city box, city flex, city space, but it's similar. So, let's see, let's test the market. We want to go out with a pilot. Yeah. Around 50% pre-lease. I think that is the kind of thing. But as I explained, the four locations which we have secured, you could do 300,000 square meters of total letter bowl. Assume that you can start construction mid of next year, second half next year. Yeah, you may start initially with 100,000, 50,000, let's see, in one location. And locations I refer to, maybe also a bit more to explain. And we do a paper, I think we have a paper, a Vietnam paper, which we can share with you. It's going to be online. So also to get a bit more background on what is the economy like, FDI, what is the market like, and why do we see opportunities and where do we see opportunities. But to explain a little bit, we could talk about one location close to... to Hanoi, in the north of Vietnam, which historically, it's a concentration, there's a lot of people living there, as I mentioned, total 100 million people in Vietnam, so in that part, in the northern part. A couple of dozen million people, so it's quite large. But more importantly, there is many of our clients with different activities. So if you refer to the Vietnamese semi-conductor industry, companies like Vistron or Foxconn, who are our clients, they have facilities in that part of Vietnam already. And historically, because they have a China plus one policy, many of those, which means that not all of the manufacturing facilities are in Vietnam or in China, some in China for Chinese markets, some outside of China for South Asian market. And that is, those are Taiwanese clients who we have been working with for more than 20 years, especially in the Czech Republic. Anyway, those are there, and they have suppliers and subcontractors and all of that ecosystem. And that's one of the target groups which we would... which we talked to and said, okay, yes, we will build properties in and around Distron, Foxconn facilities in the region of Hanoi. But in Hanoi, obviously, you can imagine there's also consumer spending. So there's also FMCG that is a need for warehouses. There is e-commerce. There is all kind of that. So our clients who are involved in 3PL statistics or supply chain, So, that's the kind of ecosystem, the clients we have, which we will plan to work for in Vietnam. So, yeah, indeed, mostly existing clients, but could, of course, also be new clients. But there's many of our existing clients who have facilities in Vietnam or who are considering opening up facilities in Vietnam. Okay.

Thanks. Very clear and looking forward for the Vietnamese paper then. And the second question is on, I think that you commented that you expect very strong ERV growth for H2. As I remember, you don't value the sending assets in Q3. So just to understand in which country you expect the biggest ERV growth and how is it based to your recently signed lease? I think that we comment a bit on the rent level, left and right, but just wanted to get from a valuation perspective, where do you see the biggest discrepancy between what you, at what level you are leasing and what the valuers is assuming as EREs?

Yeah, sure. So what we said is that we expect to grow it in line with inflation or slightly ahead of inflation, the EREs. And that comes back to where we are signing the rents as we are continuing. I said earlier to sign the rents 6% higher. We also have indexation coming in. So we see market rents crawling in line with inflation slightly ahead. If you look on a country level, there will be less EFE growth in Czech. In Czech, the opportunity for us, we have commented on that before, is more to capture the reversion. Because in Czech, we have one of the largest reversionary embedded potentials. as the market trend there already has grown quite a bit. And of course with our leases, whether they are 10 years or 15 years, it can take sometimes a while before you can capture that. So you need to go through the world. We expect more EFV codes in countries like Romania, for example. So the more upcoming markets. We'll also see some year recrudes in Poland. In Poland there will be really a divergence between the new and the old. There has been different build quality, as you know. We are a long-term owner. We commit to the locations. We build buildings where that will last because we have the commitment to own them long-term, both vis-à-vis our tenants but also vis-à-vis our municipalities. While in the past the Polish market was more dominated by trader developers, so what you see there is more of a divergence. You might have given more incentives on really older product or lower quality product, while if you look to new product that is coming to the Polish market you can reach at good rates and that's what you also see reflected in the rental growth that we are doing. So there will also be some EUV growth, but in general also across some other markets like Serbia we expect some EUV growth to come, Bulgaria. Hungary I don't think so. Hungary is a bit more vacancy at the moment, especially around Budapest, but there is also a split between the region and Budapest. The other areas of Hungary see a bit stronger rental growth than Budapest at the moment. So there's always those local factors, but on average we expect to grow in line with inflation or slightly ahead of inflation.

Thanks. And if I may squeeze a very quick third question. You could deliver up to 1 million square meters in Q4. I just wanted to understand how much of new projects you expect to launch in Q4, keeping, I would say, the 2 million square meters of development pipeline, I would say, unchanged, or could it be split a bit more into the beginning of 2026?

It will be relatively unchanged. I don't expect our pipeline to materially change. It comes also back to next year, because for next year, as you know, we got to 1.4 to 1.7. So we also need to start those projects. Simple projects will take us nine to 12 months. If you have a simple project, logistics building. In some cases you can even do it a bit quicker. But there are more complicated projects. If you do some extras for cannons, etc. So we will always run a pipeline which is slightly ahead of next year's deliveries. Taking into account the time to complete. Very clear. Thank you for your answers.

Thank you. Our next question comes from Frederick Renard from KC. Your line is now open. Please go ahead.

Hi, guys. Good morning. So just two questions on my side. The first one is on the reversion, which has come down 120 bits Q and Q. So since Q2, can you comment maybe on that? And then the second question is on the occupancy rate. You are still at 93% versus the target of 95%. I see that client retention is at 82%. It's a good level, but it's, for me, the lowest figures you had over the last two years. So is there more downside risk and occupancy rate than upside risk? And then have you any specific concern on some countries? Thank you.

So, regarding the reversion, that's partly driven by the fact that we don't reset EFEs in the third quarter. In the third quarter, as you know, we don't revalue our portfolio, only the developments. So, if you don't reset your EFEs and we are capturing reversion, as leases are coming up for maturity, naturally... the reversionary potential comes down in those quarters. There's more mathematical effect than anything else. Then your question regarding occupancy. Yes, we remain stable around 93%. And that's also what we explained during the capital market today. The two main markets which are below are the two market entries, Germany and Poland. In Poland we expect end of this year to be more around 90%. And then into next year we will creep up to the 95% target. Same with Germany. So that's part of the market entry strategy. We target to be around 95, especially for amateur markets. Some markets you even would want to be a bit above. And why do we target around the 95? Maybe also good to remind you that's really to have the growth opportunity with existing clients. We want to have always some space available to grow with existing clients in our existing parts because that gives us, if a tenant comes to us and say, I want to expand in an existing park, it gives us much more negotiation power than when you have to build a new unit. So that's why we always target around 95, and that's why our pipeline deliveries we target to be 80 to 90, to always have that space available to grow with existing clients. If you also put it in perspective, on a yearly basis, we will sign more than 2 million square meters. If you look to the occupancy, if you take it from our portfolio, if you take 5% of a portfolio of 30 million square meters, that's 700,000. We lease three times as much in a year. So actually, yes, we have a bit of occupancy, but that gives us an enormous amount of flexibility, and given the amount of leasing that we are doing, that's not a concern for us. It's just an opportunity to have those long-standing client relations and to leverage that to drive rents higher. Then on your last question, or last part of your question, which was the retention rate, Retention rate was indeed slightly lower this year, correct. No fundamental issues, but there are, of course, sometimes you can have individual tenants who decide to leave. For example, if a 3PL has a client and they want to consolidate or they want to move to a different location, they might terminate. It's not a reflection of your business. But it's more a reflection of sometimes the change in supply chains. Of course, we try to keep all our tenants. Sometimes actually, also for example, you see in Germany, it's sometimes better to replace tenants if we really want to capture that upside potential, for example, in the Deutsche Industrie portfolio. So there we are sometimes actually happy when people move out and we can replace them for a higher paying tenant. So it's always a case-by-case analysis, of course, that we are doing. The absolute figure is slightly lower, but there is no fundamental underlying driver, which would mean that the rent retention rate will be lower going forward. It depends on the leases we sign in the quarter.

Yeah, I can confirm that. I can just confirm, Martin, some of the leases we had to terminate in Germany because we, yeah. The relationship was not great, and we felt that we would be better off with a new tenant in that building, doing some refurbishment and get more rent out of the property. So that happened in Germany, and it's still happening while we speak, which is part of cleaning up the portfolio in Germany. And also with regards to vacancy, yeah, we have been around 93, 95. Sometimes also, you know, you don't need to be in a rush to lease it immediately. Sometimes certain areas need some time for the market to absorb some space. And then I'd rather have six months of vacancy cost and then do a better deal as pushing down on the rents. And so, you know, you also need to balance and understand the market and you know, if there's no demand, there's no need to push, then you'd rather wait until there is demand or until the market has been able to absorb the space which was available. But I think overall also we see from a supply side that, yeah, here and there, some of our peers and colleagues stopped or slowed down or there is no land or things like that, which is good. So long-term, we believe that these properties which we have built are good quality properties and they will continue to generate and produce income, which... Values may go up and down. It depends on the interest rates and so on and so on. But the income from the property so far has always grown, and we continue to see that. And that is more important, to build the cash flow and to make sure that we create this income in time at the correct level. So, yeah, you play with the supply and demand and balance around 93%, 95%. But, yeah, not huge. And overall, good. We are gaining market share, which is good, which also later on gives us more opportunity to grow. It's good.

Thank you. And maybe just last one on my end. Can you remind us the size of the acquisition in Romania that you didn't do?

What was the cost of the investment? Yeah. The quantum of investment was around 250 million. Thank you.

Thank you. Our next question comes from Eleanor Frew from Barclays. Your line is now open. Please go ahead.

Thank you for the presentation. A few questions. So just to confirm, was the remaining acquisition explicitly baked into your guidance? And is the acquisition not happening going to impact your GLA target for the year, the 15 million square metres? And moving forward, do you have any annual acquisition assumption guidance we could use?

In terms of GLA, that's mostly driven by our development, so we confirmed our guidance on terms of development between 1.3 and 1.6, which means indeed, like someone already mentioned, we will deliver nearly 1 million square metres in the fourth quarter, which will bring us probably rounded towards 15 million, whether it's exactly 15.0 or whether it's 14.9 or 14.8, we'll see. It depends more on where we end in that range of the deliveries. That's ultimately the key one. So that's with respect to the GLA target. If you look to acquisitions, No, we don't guide for a specific amount of acquisitions because it's really opportunity driven. If we talk land, yes, we will do each year around 200, 250, in some years maybe 300 million of land because that's a lot of individual plots and as I said, it's part of replenishing the land bank in some of the existing markets but also growing the land bank in markets which we entered recently or plan to enter. So that is a more stable acquisition pipeline on the land bank side. Understanding assets is really opportunity driven because, yes, we like to do acquisitions, but they need to make sense in capital allocation. So that's why we don't kite for a specific target. We will be there opportunistically. We are not the ones who want to pay a full price. We want to do things which make strategically sense for us. We can do things off market. That's much more our sweet spot in terms of M&A, rather than committing and forcing ourselves to buy X hundred million of standing property per year. That will not drive shareholder returns. For us, we need to be focused on what makes sense, where is pricing realistic, and where can we add value? Because we are not an investor in buying simple core product. There needs to be value-add opportunities.

And I think, Eleanor, you asked if the Romanian acquisition was a part of our EPS guidance for this year. Yes. And that's also why we say that as a consequence of the Romanian transaction not happening, we now expect to be at the lower end of our guidance range.

Great, thank you. Then on the reasoning for that portfolio falling through, does that impact your growth plans otherwise in Romania, i.e. is that region now saturated for you and is there a risk on future permits maybe? And then on top of that, are there any other markets where you have a position that could prevent you from acquiring in scale?

No, it won't affect their ability to continue to grow organically in and around their existing parks, buy land to start new parks, you know, so that we don't see that as a... as an impediment to continuing to grow our business in Romania through 10% plus year-on-cost developments, and we don't have any other market where we would think that we would have a problem.

Thanks very much. Thank you. As a reminder to ask a question later, please press star followed by one on your telephone keypad now. Our next question comes from Wim Louis from KBC Securities. His question is, on Italy, can you give more details on tenants' targets, Greenfield versus Brownfield? What is your SQM GLA target for the next couple of years? Will you consider buying a standard asset portfolio?

Thanks for the question with regards to Italy. I don't know how you see it, Martin, but I think it's a bit too early. We don't disclose too much details there. What we can say is that we have been looking at Italy. for the past years and we as we communicated back in 2021 when we did our IPO we said okay we would like to go to Western European markets which we said initially we're going to look at the Netherlands and Germany Germany worked out well Holland less. Happy with the ALC property in Amsterdam, which has been some good take up and that's okay. But besides that, we have done very little in the Netherlands. No, it's not a place where we see opportunity, so we slow down. But we always communicated we wanted to do more in Western Europe, and Italy has been on our wish list. We now see a good opportunity to enter. I think we are ready for it in terms of we have the money, we have the capacity, we have the team, but more importantly, we have also identified the opportunity. So, what we've done in the meantime, we have established a small team of people. We currently work on securing land and, yeah, and it's not in any of our pipeline projects, so it's the base plan, the 26 million or 20-something million square meter land bank. There's nothing in Italy. It doesn't include Italy, so it's on top. But I think we will keep the good news for later. That's what I think, Martin. Let me maybe add or comment on anything you want to share at this moment.

Yeah, so we'll announce the transaction when it's there. You know, we always announce it when we close something. But in general, we are looking at broader opportunities. Where we add most of the value is through Lens. And whether that's Greenfield or Brownfield, we can do both. It comes back to what is the location. That's the key thing. Whether it's Greenfield or Brownfield is not a massive factor in that. It's just a bit different in terms of... Do you have to take into account demolition costs, etc.? We are looking for the right locations in Italy, which can give us a kickstart. We are looking for sizable opportunities where we can develop our park model, which is important for us. So not only small land plots, but more sizable ones in line with our strategy. What we see in opportunities in Italy is a couple of things. There's a very strong manufacturing base. And if you look to our portfolio, you know we do a lot in manufacturing. Roughly 50% of our portfolio is manufacturing. So we see opportunities there, as many of our peers here in Italy are more focused on logistics. So that's an opportunity for us. We see some opportunities in some smaller business units closer to town. Italy has quite a lively SME environment. And then you know what we have done, for example, in Bern now. So you can think of doing certain of those projects here in Italy. So that's the opportunities that we see, and that is the land plots we are looking for. And as part of each market entry, we are looking at, of course, a broad set of opportunities, and hopefully we can update you later this year more specifically.

Thank you. Our next question is from Alvaro Mata from Santander, A.N., Their question is, the 93 occupancy looks a bit lower than others. I wonder if there is a specific reason for that. Any exclamation would help. Your LTV at 45.2% continues to be a bit higher than your target of 40 to 45%. When shall we expect a decline and to what level? How important is this for you? ICR at 2.5x is in the low side. Do you expect an improvement in 2026?

No, the LTV is not of our concern, and the vacancy is around 93, 95. We talked about it before. We're not going to repeat. Also, historically, it has been around the same number. We wait for a good moment to do good deals at higher ends. And for the rest of the questions, I refer to what has been previously discussed. Thank you.

Yeah, regarding the ICR, you know, I think we reported earlier that we already took most of the repricing from the higher interest rate environment that we have today compared to the environment 2019, 2020, 2021. We see our ICR bottoming out at two and a half, that's also what the rating agencies are saying and we've consistently highlighted that everything that we invest in developing at 10% plus yield on cost is incremental to our ICR. That's also one of the reasons that the rating agencies are comfortable with where we are, and despite that ICR of 2.4 at the time, Standard & Poor's gave us the rating upgrade. So, no, we don't see any problem with those ratios, and we expect that to improve over time.

Thank you. Our next question is from Jesse Norcross from ING. Their question is, how big is the defence spending opportunity in Europe and Germany for the logistics sector and for the CTP in particular? What kind of timeline? And on Moody's, how confident are you of getting ratings upgrade there or is this not a priority at this point in time?

So a rating upgrade is always a priority. I think we are happy with the upgrades we got from S&P to BBB Flat, which I think reflects our ambition. We want to be a solid BBB Flat company. We think that reflects the underlying of our business with the stable cash flow that we have. each year able to generate, where Raymond also referred to. We target to have a rental income of 1 billion by 2027, which gives us an enormous amount of stability for the group and a very good coverage, basically, of our ICR and net debt to EBITDA. So clearly it's a priority for us to also work on Moody's. I cannot speak about their timeline, We plan to deliver on the plan like we always do. Moody's has given us a positive outlook, but it's ultimately up to them, of course, to take the action. We work as hard as possible to get that. And then I'll let Raymond comment on the defence opportunity.

I don't know.

Thank you. Our next question is from Cesare Bernatech from ESP. Do you maintain the target level of deliveries for FY26 within the 1.4 to 1.7 MN SQM range?

Yes, we do. We have confirmed the guidance we have given at the Capital Markets Day. No change. We are on track for this year. So we are also, with the leasing we are doing, on track for next year.

Thank you. We currently have no further questions, so I'll hand back to the CTP management team for closing remarks.

Thank you all for attending. If there are any follow-up questions, don't hesitate to reach out to us. We are also doing quite some of the conferences and roadshows in the coming days. So we are always happy to continue the dialogue with our investors. So thank you for now.